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The Sustainability of Public Finances in Republic of Moldova Under EU Fiscal Rules

Author

Listed:
  • Covalschi Tatiana

    (Faculty of Economic Sciences, Moldova State University, Moldova (Republic of))

  • Lazăr Sebastian

    (Faculty of Economics and Business Administration, University Alexandru Ioan Cuza of Iași, Romania)

Abstract

This paper analyses public finances sustainability in the Republic of Moldova under the European Union fiscal rules, by estimating the structural budget balance indicator using a three steps methodology. We concluded that, except for 2009, the Republic of Moldova complies with the Maastricht numerical fiscal rule; however it does not comply with the new fiscal rules regarding the structural deficit and public expenditures growth that had been set by the Fiscal Compact. The fact that budget deficits and public debt had been sustainable was mainly because of the concessions made by the external creditors in restructuring the public debt and was not a merit of national government. Moreover, since the regular budget deficit and the structural one tell different stories, we strongly advocate for using the latter in order to complement the existing data with a medium-term budgetary view.

Suggested Citation

  • Covalschi Tatiana & Lazăr Sebastian, 2016. "The Sustainability of Public Finances in Republic of Moldova Under EU Fiscal Rules," Scientific Annals of Economics and Business, Sciendo, vol. 63(2), pages 149-159, June.
    • Handle: RePEc:vrs:aicuec:v:63:y:2016:i:2:p:149-159:n:1
    DOI: 10.1515/saeb-2016-0112
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    More about this item

    Keywords

    public finance; sustainability; public debt; budget deficit; output gap; structural deficit;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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